March 2 – 8, 2026: Weekly economic update

Oil futures briefly reached $120 per barrel.

Over the weekend, Israel and the United States began conducting intensive strikes on oil refineries in Iran, while Iran launched retaliatory strikes against refineries in Israel. The conflict increasingly expanded to regional energy infrastructure, which was reflected in a sharp rise in energy prices.

Prices later declined to $100 per barrel following reports that G7 countries were considering releasing up to 400 million barrels of crude oil from their strategic reserves. In addition, according to various sources, the overall intensity of missile strikes fell by approximately 80–90%.

A ground operation currently appears unlikely, as a number of factors — including Iran’s geography — could prolong the conflict. Consequently, energy prices are expected to remain elevated.

Due to the potential loss of part of their electorate, Republicans risk losing the upcoming midterm elections to Congress, an outcome Trump cannot afford to allow. Today, Trump stated that the war could end soon, which contributed to a decline in energy prices.

An Israeli representative stated that, overall, the key objectives have been achieved — namely, the destruction of Iran’s nuclear program and the reduction of its missile capabilities.

Meanwhile, Iran’s Deputy Foreign Minister stated that Iran is prepared to abandon its nuclear program, provided that the United States can offer a satisfactory alternative, which has not yet been proposed.

The main open question today is the Strait of Hormuz.

A sharp decline in shipping traffic through the Strait of Hormuz has been observed following the start of the attacks. Prior to this, an average of 20–30 vessels passed through the narrowest section of the strait every six hours in both directions.

The number of vessels has now fallen almost to zero. The Strait of Hormuz is one of the most critical nodes in global energy logistics, and such a dramatic reduction in traffic significantly increases the risk of energy supply disruptions and heightens volatility in commodity markets.

Qatar’s Minister of Energy stated that the war could force Persian Gulf countries to halt energy exports within several weeks.

Kuwait and the UAE have already begun reducing production as storage facilities fill up following the closure of the strait, while Iraq has begun suspending part of its output. Today, Saudi Arabia also announced production cuts, citing storage capacity that is fully saturated.

The primary recipients of oil transported through the Strait of Hormuz are Asian countries (over 80%), most notably China, India, South Korea, and Japan. As a result, any potential supply disruption primarily poses inflationary risks to Asian economies.

The impact on the United States is more limited. The U.S. imports very little oil from the Persian Gulf due to its high level of domestic shale production, meaning that rising prices are partially offset by higher energy-sector revenues.

The inflationary risk stems not from a short-term spike in prices, but from its duration. A prolonged disruption could accelerate inflation, worsen trade balances, and weaken the currencies of Asian economies.

The impact of rising oil prices on inflation in the United States:

According to Goldman Sachs estimates, a 10% increase in oil prices could raise the headline CPI by approximately 0.28 percentage points and PCE by around 0.20 percentage points, while the impact on core inflation remains limited — about 0.04 percentage points. In other words, even a significant increase in oil prices is expected to have only a limited effect on inflation in the United States.

United States — key takeaways

• Interest rates remain unchanged, with the Fed maintaining a cautious tone.
• Monetary policy remains moderately restrictive, gradually moving toward a neutral stance.
• The Federal Reserve is maintaining a delicate balance: supporting financial markets while avoiding signals of imminent or rapid rate cuts.
• U.S. macroeconomic data continues to support a soft-landing scenario: economic growth remains above potential, inflation is gradually slowing, and the labor market is cooling, with no clear signs of a recession.

INFLATION: CONSUMER PRICE INDEX (JANUARY)

• Core CPI: (m/m) 0.2% (prev: 0.2%); (y/y) 2.6% (prev: 2.6%).
• CPI: (m/m) 0.3% (prev: 0.3%); (y/y) 2.7% (prev: 2.7%).

PRODUCER PRICE INDEX (JANUARY)

• PPI (m/m): 0.5%, prev: 0.2%.
• Core PPI (m/m): 0.7%, prev: 0.0% (revised):

INFLATION EXPECTATIONS (MICHIGAN) (FEBRUARY)

• 12-month inflation expectations: 3.4%, prev: 4.0%.
• 5-year inflation expectations: 3.3%, prev: 3.3%.

GDP

GDP (U.S. Bureau of Economic Analysis, BEA) (Q4 25, annualized, preliminary estimate): +4.4% (2Q25: +3.8%)

The Federal Reserve Bank of Atlanta’s GDPNow indicator (“current” estimate of the official figure prior to its release): 3.0% (prev: 3.0%).

Chicago Business Activity Index (PMI), United States: 54.0 (prior: 42.7):

BUSINESS ACTIVITY INDEX (PMI) (FEBRUARY)

• (Above 50 indicates expansion; below 50 indicates contraction)
• Services sector: 51.7 (prev: 52.7);
• Manufacturing sector: 51.2 (prev: 52.4);
• S&P Global Composite: 51.9 (prev: 53.0).

LABOR MARKET (BLS) (FEBRUARY)

• Unemployment rate: 4.3% (prev: 4.4%);
• Total number of continuing jobless claims in the U.S.: 1,868K (prev: 1,869K);
• Initial jobless claims: 213K (prev: 213K);
• Change in nonfarm payroll employment: 130K (prev: 48K);
• Change in private nonfarm payroll employment: 172K (prev: −64K);
• Average hourly earnings (y/y): 3.7% (prev: 3.8%);
• JOLTS job openings: 6.542M (prev: 6.928M).

MONETARY POLICY

• Effective Federal Funds Rate (EFFR): 3.50%–3.75%;
• Federal Reserve balance sheet: $6.629 trillion, +1.44% since the suspension of QT ($6.535 trillion).

MARKET FORECAST FOR RATE (FEDWATCH)

At the upcoming meeting (March 18), the estimated probability of a 0.25% rate cut is 2.59%.

Over the next 12 months, the market is pricing in two 0.25% rate cuts, bringing the target range to 3.00–3.25%. The first cut is expected at the July meeting.

Today:

A week earlier:

SP500

• Weekly performance: –2.02% (week-end close at 6,740.01); year-to-date: –1.54%. On Monday, the index posted a +1.53% gain.

NASDAQ100

• Weekly performance: -1,27% (week-end close at 24643,01); year-to-date: -2,40%. On Monday, the index gained +2.5%.

RUSSEL 2000 (RUT)

• Weekly performance: -4,07% (week-end close at 2525,3013); year-to-date: +1,75%.

VIX

VIX (volatility index) declined from its peak of 35.30 points to 23 points.

The chart shows the dynamics of net foreign capital inflows into U.S. assets (Net foreign inflows into U.S. assets):

The data is presented as a 12-month rolling sum and is broken down by the main asset classes: U.S. Treasury securities, agency bonds, corporate bonds, and equities.

Following the significant capital outflows during the 2020 pandemic, foreign investment inflows into U.S. assets began to recover steadily. In 2024–2025, global demand for U.S. assets, particularly equities, has increased notably, while demand for Treasuries has remained stable. This reflects the attractiveness of the U.S. market amid higher interest rates and the relative resilience of the U.S. economy.

By the end of 2025, total inflows reached their highest levels for the observed period, exceeding $1.5 trillion on an annualized basis.

Eurozone

Interest rates remain unchanged, with inflation largely under control.

Monetary policy is broadly neutral — the balance of risks has shifted from inflation toward economic weakness.

As trade tensions have eased, the ECB has revised its GDP and inflation forecasts upward for the coming years.

Europe is stabilizing, but its growth pace continues to lag behind that of the United States.

Interest rates

• Deposit facility rate: 2.0% (previous: 2.0%)
• Marginal lending facility: 2.4% (previous: 2.4%) — the rate at which banks can obtain overnight funding from the regulator
• Main refinancing (policy) rate: 2.15% (previous: 2.15%)

Inflation — Consumer Price Index (CPI) (February)

• Core CPI (YoY): 2.4% (previous: 2.2%)

• CPI (MoM): 0.7% (previous: –0.6%, revised)

• CPI (YoY): 1.9% (previous: 1.7%, revised)

GDP (Q4, final estimate)

• QoQ: 0.3% (previous: 0.3%)
• YoY: 1.3% (previous: 1.4%)

Unemployment rate (February)

• 6.10% (previous: 6.20%).

Purchasing Managers’ Index (PMI) (February)

• Services sector: 51.9 (previous: 51.8)
• Manufacturing sector: 49.5 (previous: 49.4)
• S&P Global Composite PMI: 51.9 (previous: 51.9)

EURO STOXX 600 (FXXP1!)

• Weekly performance: -5,85% (Week-end close: 597,1); Year-to-date: +0.52%.

Since the escalation of the conflict, the index has fallen by more than 8% from its recent highs. It has since rebounded by +4.5% from yesterday’s low.

This movement is directly linked to rising energy risks. Although Europe’s dependence on oil supplies through the Strait of Hormuz is relatively limited — around 3%, the European economy remains significantly more sensitive to energy prices, particularly natural gas.

Natural gas is a key energy source for both industrial production and utilities. Unlike the United States, where oil and relatively cheap domestic gas dominate the energy mix, natural gas is widely used across European industry, including chemicals, metallurgy, fertilizer production, glass and cement manufacturing, and power generation.

In these sectors, gas is not only a fuel but also a critical feedstock, which means rising prices directly increase production costs.

Europe remains a net importer of natural gas, with a significant share of supply arriving as LNG, whose pricing is directly linked to global markets. This makes the European energy market highly sensitive to geopolitical risks.

The transmission to inflation in the Eurozone tends to occur relatively quickly, given the central role of gas in both electricity generation and industrial production. As prices rise, the effects rapidly feed into:

• PPI (producer price inflation)
• Transportation costs
• Utility tariffs

Subsequently, some of these cost increases are passed through into CPI (consumer price inflation), potentially leading to tighter monetary policy.

China

The economy is stabilizing primarily through exports, while domestic demand and investment remain weak. Policy stimulus remains targeted and cautious.

Interest rates remain unchanged;

Monetary policy remains accommodative;

China has announced the continuation of fiscal support for economic growth under its 2026 plan, including measures to stimulate domestic demand, optimize tax incentives and subsidies, and modernize industry.

Interest rates

• 1Y Loan Prime Rate (medium-term lending): 3.00%
• 5Y Loan Prime Rate (benchmark affecting mortgages): 3.50%

Inflation indicators (January)

• Consumer Price Index (CPI):
• MoM: 0.2% (previous: 0.2%)
• YoY: 0.2% (previous: 0.8%)
• Producer Price Index (PPI) (YoY): –1.4% (previous: –1.9%)

GDP (Q4, final estimate)

• QoQ: 1.2% (previous: 1.1%)
• YoY: 4.5% (previous: 4.8%)

Unemployment rate (January)

• 5.1% (previous: 5.1%).

Industrial production / investment / retail sales

• Industrial production (January, YoY): 5.9% (previous: 4.8%).
• Fixed asset investment (January, YoY): –3.8% (previous: –2.6%).
• Retail sales (January, YoY): 0.9% (previous: 1.3%).

Trade indicators

• Imports (January, YoY): 5.7% (previous: 1.9%)
• Exports (January, YoY): 6.6% (previous: 5.9%)
• Trade balance (January): $114.30 billion (previous: $111.68 billion)

Purchasing Managers’ Index (PMI) (February)

• Manufacturing: 49.0 (previous: 49.3)
• Non-manufacturing: 49.5 (previous: 49.4)
• Composite PMI: 49.5 (previous: 49.8).

CSI 300 INDEX (000300.HK)

• Weekly performance: -1,44% (week-end close at 4660,43); year-to-date: +0,66%. Since the start of the week: +1.78%.

Hang Seng TECH Index (HSTECH)

• Weekly performance: -3,70% (week-end close: 4947,50); year-to-date: -10,12%.

BOND MARKET

• U.S. Treasury Bonds 20+ Years (ETF TLT): –2.60% for the week (weekly close: 88.46); +1.49% year-to-date.

YIELDS AND SPREADS

• Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity: 4.12% (prev.: 3.98%); Yield on 2-year Treasuries: 3.57% (prev.: 3.40%);
• ICE BofA BBB US Corporate Index Effective Yield: 5.09% (prev.: 4.91%)

• The yield spread between 10-year and 2-year U.S. Treasury securities is 55 basis points (prev.: 58).
• The yield spread between 10-year and 3-month U.S. Treasury securities is 43 basis points (prev.: 32).
• The price of the 5-year U.S. Credit Default Swap (CDS) (default insurance) is 33.30 bps (vs 31.03 bps last week).

GOLD FUTURES (GC)

• Weekly performance: -1,70% (week close: $5158,7 per troy ounce); year-to-date: +19,08%.

Despite rising geopolitical tensions, gold has declined by approximately 5% since the beginning of the conflict. The gold market has not yet priced in a geopolitical premium.

OIL FUTURES

• Weekly performance: +35,63% (week-end close: $90,90 per barrel). Year-to-date performance: +58,33%.
• OPEC+ announced an increase in supply of 201 thousand barrels per day (0.2% of global supply);
• Geopolitical risks in the Middle East region.

DOLLAR INDEX FUTURES (DX)

• Weekly performance: +1,24% (week-end close: 98,855). Year-to-date performance: +0,88%.

BTC FUTURES

• Weekly performance +0,17% (week-end close: $65975); year-to-date: -24,79%. Increase since the start of the week: +7.07%.

ETH FUTURES

• Weekly performance -0,10% (week-end close: $1937,4); year-to-date: -34,85%. Increase since the start of the week: +6.13%.

Bitcoin Exchange Netflow

Net flows of Bitcoin to centralized exchanges.

Total Bitcoin balance on centralized exchanges (BTC: Balance on Exchanges)

Over the past three weeks, negative netflows to exchanges have dominated the BTC market. This means that the volume of coin withdrawals from trading platforms exceeds inflows.

This trend is accompanied by a decline in the total BTC balance on exchanges (lower chart). The balance has fallen to approximately 3.01 million BTC, the lowest level since 2018.

At the same time, selling by long-term holders has declined by approximately 87%. Such a combination of metrics indicates continued liquidity withdrawal from exchanges and may suggest that some investors are shifting toward long-term holding.

Historically, similar periods have corresponded to phases of market accumulation or consolidation following corrections and have been accompanied by reduced short-term selling pressure.

Bitcoin and geopolitical risk

The chart from Bitwise shows how Bitcoin returns behave following periods of elevated geopolitical risk. The analysis is based on the Geopolitical Risk Index (GPR), which is divided into percentiles (levels of tension). Bitcoin’s excess forward performance is then measured across different horizons — from 1 day to 1 month.

The data shows that the higher the level of geopolitical tension, the stronger Bitcoin’s subsequent returns tend to be. When the risk index is in the upper percentiles (60–80 and >80), the average excess return of BTC after one month reaches approximately +6% and +3.8%, respectively.

Conversely, during periods of very low geopolitical risk (<20th percentile), Bitcoin’s returns are often negative, reaching –10.2% after one month.

This may indicate that during periods of heightened uncertainty, some capital views BTC as an alternative safe-haven asset or a diversification instrument.

TOTAL CRYPTOCURRENCY MARKET CAPITALIZATION

• Total crypto market capitalization: $2.4 trillion (vs $2.28 trillion a week earlier) (coinmarketcap.com).
• Crypto asset market shares:
• Bitcoin: 58.8% (58.1%)
• Ethereum: 10.4% (10.3%)
• Others: 30.8% (31.7%).

ETF Net Flows Chart: